Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

I thank the Deputy for giving me the opportunity to outline the Government's supports for local authorities, with particular reference to Galway county. As the local authority budgetary period will shortly be under way, my Department has notified Galway County Council and all other local authorities of local property tax allocations for 2022 and of a separate allocation as a contribution towards the additional costs that will arise in 2022 as a consequence of the national pay agreements and the unwinding of the financial emergency measures in the public interest, FEMPI, legislation. The allocation in respect of Building Momentum - A New Public Service Agreement 2021-2022 is €4.44 million for Galway County Council and its objective is to reduce the cost of pay and pensions next year. In light of the Deputy's concerns about staffing, I trust it will be welcomed.

Turning to the funding position more generally, LPT was introduced to provide a stable and sustainable funding base for the local authority sector, helping to provide greater levels of connection between local revenue and associated expenditure decisions. LPT broadens the tax base by reducing the level of central funding required by local government. Local retention of the LPT began in 2015 and since then the overall principles and allocation methodology have broadly remained the same. Currently, 80% of LPT is retained in the area in which it is collected, with the other 20% supporting equalisation for local authorities with LPT bases lower than their funding baseline. The programme for Government, Our Shared Future, commits to bringing forward LPT reforms, including providing for all money collected locally to be retained within the county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case.

The Finance (Local Property Tax) (Amendment) Act 2021 gave effect to a package of measures in line with the commitments in the aforementioned programme for Government to address the future of the LPT. In accordance with this legislation, the Revenue Commissioners are currently conducting the first LPT revaluation exercise, with returns from property owners due to be returned by early November. As the timeline for the revaluation exercise does not fully align with local authority budgetary timelines, including the municipal district budgetary process, LPT allocations for 2022 have been provisionally based on the 2021 LPT yield, with no change next year to the allocation model, that is, the 80:20 model. All other elements will also be based on 2021 figures, including the LPT baselines, the equalisation contribution and self-funding of housing and roads from surplus LPT. The Government has signalled its intention that the move to 100% local retention of LPT will be introduced over the 2023 and 2024 budgetary cycles. Any changes to the allocation process and funding baselines may be considered in that context.

My Department recently confirmed LPT allocations to local authorities for 2022 amounting to €524 million, a figure which includes the impact of local variation decisions. The allocation to Galway County Council from LPT is €14.5 million. This includes €2.7 million of equalisation funding, as the 80% of the LPT retained locally in Galway's case is lower than the baseline or minimum funding level. It is relevant in this context that the elected members of Galway County Council have the option to increase or decrease the local LPT rate which, as with all budgetary matters, is a reserved function of councillors. Galway County Council has not opted to avail of this opportunity for 2021 or 2022. The council would have benefitted from an additional €2.2 million in 2022 if the members had applied the 15% upward variation next year in the same way as many other authorities have done. Eleven local authorities in a similar position to Galway County Council have decided to maximise their benefit from the upward variation mechanism next year. Separate to any general examination of baselines, it is the long-standing position that the Department will not allocate additional LPT funding to local authorities that have declined to use the revenue-raising tools available to elected members.

Across all schemes and funding sources my Department provided €51.1 million in 2019 and €82.9 million in 2020 to Galway County Council. The increase in 2020 was due to an increase in capital funding for housing as well as funding in respect of the Covid-19 commercial rates waiver and for additional expenses and lost income linked to the pandemic. Galway County Council also received a once-off allocation of €1 million for 2021.

This money was linked to the operation of municipal districts and was subject to a small number of requirements, including that the funding be divided equally among the municipal districts. My Department is currently reviewing correspondence issued by the council in respect of this funding to determine if each of the conditions have been complied with.

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